A 6,000-word memo, Q3 earnings, the first desktop app, and an all-time low stock price. Snap has had a busy October!

The strong product/design-minded founder in Evan. The young user base. The LA location. The numerous hit products that have influenced many others. There is so much to love. But like any investment, there are many reasons to be concerned.

Identity Crisis

As a product manager, I appreciate focus. I prefer working for a leader that is capable of understanding what the company is, and what it isn’t. A mission that is inspiring and provides direction. This is one quality that has drawn me to Snap. Unlike Amazon, that does a little bit of everything, or Microsoft, that has its fingers in many cookie jars, Snap is focused. Snap has one app with a limited amount of functionality.

Since the IPO roadshow and the renaming of the company from “Snapchat” to “Snap”, Evan has insisted that Snap is a camera company. Evan’s 6,000-word memo continues this narrative. The first line of the memo is “We are a camera company.”

This line is followed up by –

“We contribute to human progress by empowering people to express themselves, live in the moment, learn about the world, and have fun together.”

This is an identity crisis. Evan’s stubborn attempt to label Snap a “camera company” is a leap. This may be his attempt to shake the “social media” label, which I commend, but it’s clear to me that Snap is a communications company. One that does an especially good job of allowing people to communicate through pictures and videos.

Later on, Evan says

“We’ve been working hard since the redesign to solve the problems that we created and continue making Snapchat the fastest way to communicate.

And sets the 2019 OKRs as follows

2019 OKRs

Make Snapchat the Fastest Way to Communicate

Find Best Friends for all Snapchatters

Achieve Full Year Profitability

Lead the Way in Augmented Reality

Spread Positivity

Camera or fast communication. What is Snap? Can it be both? What should Snap be?

Fastest Communication

Striving to be the fastest way people communicate is a noble goal that addresses a basic need for everyone on earth. From Western Union to AT&T to Tencent, many companies have been built by focusing on improving the speed of communication.

If Evan wants to make Snapchat the fastest way to communicate, what are the best ways? A picture tells a thousand words. In this way, Evan’s stance that Snap is a camera company makes sense. But peer-to-peer digital communication is largely a text game that Snapchat isn’t concentrating on.

These products are much different than Snapchat. They’re multi-device (PC and mobile). They’re multi-platform (iOS, Android, web). They have “light” versions to reach those with low bandwidth access.

There are some things that are slow to change. No matter how much mobile keyboards improve, users are still quicker at typing on a laptop/desktop keyboard. To be the go-to communications app, it’s important to have everyone’s friends on the app. Without a low bandwidth version, you will not accomplish that goal.

Beyond distribution, these Snpachat is a different experience than the leading messaging apps. Snapchat opens up to the camera, the others open up to a text box. Snapchat is ephemeral with no option to save your history. For Snapchat to become the fastest way for me to communicate, they’d have to move away from their camera-centric approach and greatly invest in their text-based communication.

One-on-One, One-to-Many, One-to-Newsfeed

ICQ, AOL Instant Messenger, WhatsApp, Messenger. These apps had/have a lot of users, with high engagement. But they also never made money.

One-to-Newsfeed products like Facebook, Twitter, and Instagram have shown to be highly profitable. Not many digital ads convert better than a native ad in a newsfeed.

One-to-one or one-to-many chat experiences, on the other hand, have rarely found a sustainable business model. Tencent *may* be the exception but WhatsApp and Messenger’s inability to monetize in the US shows there is still work to be done in this space.

Although I like Snapchat’s focus on fast communication I worry about its ability to monetize. Snapchat Stories, which is a One-to-Newsfeed type of model, is very monetizable (but now a crowded space). Facebook has started monetization with WhatsApp and Messenger by allowing businesses to communicate to customers. Facebook is in the process of rolling out paid tools for businesses but has not yet meaningfully monetized the largest communication apps in the United States.

Bottom Line

Evan needs to decide if he wants Snap to concentrate on cameras or communication. Despite monetization concerns, the “fastest communication” play is Snap’s best bet. Snap should invest in bringing Snapchat to different platforms (web, Apple TV, Amazon Fire), improve their text-based chat and create a low bandwidth friendly version. These steps will allow Snap to empower the world to communicate as quickly as possible.